Earnings Trades – Options Expiration review for the month of May

I exited a large % of the Earnings trades this week (usually the design when using monthly options). I performed a post-trade review – the usual practice – and here is a brief look at the performance of the exited trades:


A few things I noticed this cycle:
  1. Almost all the Call Flys expired worthless. In all but one of the trades involving a CF the short Puts expired as well (BWLD had to be hedged with stock, was called away)
  2. On a % basis, I had a slight increase in post-Earnings trades
  3. Stock trading around an Options trade (hedging, tagging along) continues to be crucial in maintaining/increasing a gain in the trade. Can’t stress this point enough: it is so important to be ready to hedge with stock in after-hours or pre-market when using Options in an Earnings trade (even when you are simply long Options as well)

– DM 11:30 AM CST


Trade Idea review in Greenbrier

On 4/6 I posted the following Earnings Trade Idea for $GBX:

Now let’s take a look at how the stock reacted to a solid Earnings report on 4/7:


The stock is up nearly 5% as of this post, hitting a high of $64.71 today. Now let’s see how the Options pieces look from the Trade Idea:

Long April 60/65 1×2 Call Ratio: 4.00/.90 (so you can close for a $2.20 credit)
Short April 55 Put Calendar: .80/.05 (so you can close for a $.75 debit)
Net if you close all pieces is +$1.45

If I had done this trade I would at least close the Long Call Spread here. I would leave the Put Calendar for now as I would not mind owning at $55 at May expiration.

– DM 9:45 AM CST

Options Expiration for March 27

Herbalife $HLF  I am Long the 45/43 1×2 Put Ratio and Short stock at $43 (hedge). I will let the Long PS auto-exercise for +2.00 and the remaining Short $43 Puts will assign, closing the Short stock at B/E. Options Net final will be: $2.08

ProShares Ultrashort 20+ Year Treasury $TBT  I am short the $45 Calls (covered). I will adjust to future expiration today (2 weeks out likely) for a credit, try to boost the Options Net above $2.00


– DM 11:00 AM CST


50/50 Basket update

It has been a while since I’ve had much to talk about with this particular Trading approach. I have had some activity in March so I’ll do a review:

$CAPN  This was a new short stock trade on 3/4 at $9.15 & it hit a Stop at 6.00 on 3/11 (closed)

$CRMD  This was a new short stock trade on 3/11 at 9.00 & hit a Stop at 7.50 on 3/12 (closed)

$EYES  This was a new short stock trade on 3/9/2015 & has a Stop set at $14.90 (hod on 3/13)

As a refresher:  I scan for stocks that are “50% above the 50 SMA” as a starting place. I view these as VERY extended.


– DM Noon CST


Earnings Trades update

Last full update can be reviewed here.

Current Positions:

Netflix $NFLX  I remain Long stock at $345 with Short January 2016 $450 Calls (covered calls). I am Long the April 02w 470/440/420 1×2 Split Put Ratio (stock protection). No change

Google $GOOGL  I am Long stock at $525 (as of 3/6, let L Calls exercise) and Short the Sep $550 Calls (covered calls). Activity this week

Centene $CNC  I am Long stock at $56 (2x size) and Short the Mar $60 Calls (covered calls, 2x size). No change this week

Twitter $TWTR  I am Long stock at $41.99 with Short June $45 Calls (covered calls). No change this week

Buffalo Wild Wings $BWLD  I am Long the Mar 190/200/210 Call Fly and Short the June $195 Calls. No change this week

Boston Beer $SAM  I am Long the 260/270/280/290 Call Fly. No change this week

MercadoLibre $MELI  I am Short the Mar 135/140 Cs & 130/125 PS. No change this week

Air Methods $AIRM  I am Long the Mar 45/50/55 1×2 Split Call Ratio. Activity this week

AutoZone $AZO  I am Short the Mar 690/620 Strangle (new)

Cooper Companies $COO  I am Long the Mar 170/175/180 Call Fly with Short $155 Puts (new)


– DM 11:05 AM CST